A cheat sheet for candlestick patterns is a convenient tool, allowing you to quickly identify the patterns you see on a candlestick chart and whether they’re usually interpreted as bullish or bearish patterns.
Our candlestick pattern cheat sheet will help you with your technical analysis. For example, the candlestick patterns included in the cheat sheet can help you identify reversal signals, bullish and bearish candle types and more.
If you find it more convenient to print out your learning materials, here’s our printable candlestick patterns cheat sheet in PDF form.
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Candlestick chart basics
A candlestick chart is a type of price chart used to describe the price movements of stocks, derivatives, commodities, cryptocurrencies and other tradeable assets. Candlestick charts trace their origins back to Japan, most likely in the late 1800s.
Today, candlestick charts are commonly used, even by traders and investors who are not necessarily trying to analyze candlestick patterns. If you go to a website like TradingView or check a cryptocurrency’s price on a crypto exchange, the default chart style will most likely be a candlestick chart.
Candlestick charts provide several points of information on what happened to the price of an asset in a specified time interval.
Each candlestick is divided into three sections — The body, the upper shadow, and the lower shadow. The body of the candlestick tells us the opening and closing price of the selected time interval.
In the shadow sections, we can see the highest and lowest prices achieved during the time interval. The shadow sections are also sometimes called “wicks”. For example, you might have heard crypto traders say something like “Did you guys see that massive BTC wick on Binance?”.
In most cases, a candlestick where the close is lower than the open is colored red, while a candlestick where the close is higher than the open is colored green. Some charts can use a different scheme, but the important thing to understand is that any candlestick chart will have a visual way of distinguishing between bearish and bullish candles.
We can clearly explain how candlestick charts work using a simple example. Let’s say that that we are looking at a candlestick chart for the Bitcoin price that uses a 1 hour interval.
For the sake of simplicity, let’s say that we begin recording the price at 12:00 PM, when the price of Bitcoin is at $30,000. Right after the start of the candle, the Bitcoin price drops to $29,800. Then, it recovers and reaches a peak of $33,500. Finally, the price of Bitcoin drops a bit and is at $30,200 by 13:00 PM.
Here’s the information our candle will display after we move on to the next candle:
Open: $30,000
Close: $30,200
High: $33,500
Low: $29,800
Since our candle’s close is higher than its open, it will be colored green.
Important candle types
Now, let’s take a look at some important candle types. We’ll be covering the Doji, Hammer and Shooting star candle types. Of course, there’s also other types of candles, and the candle types can be subdivided further into more specific categories.
Doji
A Doji candle is a candle with a very small body. In other words, it’s a candle where the open and close prices are very close together. Doji candles are typically interpreted as signaling a trend reversal. Sometimes, it’s also analyzed as a sign of indecision in the market.
There’s several different types of Doji candles — examples include the Dragonfly Doji, the Gravestone Doji and the long legged Doji.
Hammer
The Hammer candle is a type of candle that’s usually interpreted as signaling a bullish price reversal. The Hammer candle has a long lower wick, a small body, and a small (or no) upper wick. You might have noticed that the Dragonfly Doji and the Hammer look quite similar. The difference between the two is that Hammer candles have a larger body.
Shooting Star
The Shooting Star is a candlestick that is characterized by a long upper wick, a short (or no) lower wick, and a relatively small body. It is usually interpreted as a bearish candlestick, as it tells us that the price rose significantly during the time interval, but was eventually pushed back towards its open price.
Candlestick patterns
Now, let’s go through a selection of some of the most commonly analyzed candle patterns.
Bullish candlestick patterns
Hammer
Bullish engulfing pattern
Piercing line
Inverted hammer
Morning star
Morning doji star
Bullish harami
Bullish engulfing cross
Bullish belt hold
Three white soldiers
Bullish meeting line
Tower bottom
Three stars in the south
Bearish candlestick patterns
Hanging man
Bearish engulfing pattern
Dark cloud
Shooting star
Evening star
Evening doji star
Bearish harami
Bearish harami cross
Bearish belt hold
Upside gap two cross
Three black crows
Bearish meeting line
Dumpling top
Tower top
Advance block
Bearish breakaway
Things to keep in mind when you’re analyzing candlestick patterns
If you’re just getting started with analyzing candlestick patterns, it’s not recommended to apply your analysis to real trades. Trading is difficult and risky already, and there’s no reason to increase the risk even further by trying to apply a skill that you haven’t mastered yet.
Instead, you should use a platform that offers a demo trading mode, or simply analyze price charts on platforms like TradingView and try to predict how the market will play out based on its current candlestick patterns. This approach will give you a risk-free way to learn candlestick patterns at your own pace.
Also, you should keep in mind that analyzing candlestick patterns is far from an exact science. Patterns that are considered bullish are not always followed by positive price action, and the reverse is true for patterns generally regarded as bearish.
As you spend more time analyzing the charts, you’ll become better at identifying contexts in which you can apply your knowledge of candlestick chart patterns with confidence, and contexts in which the conventional wisdom of candlestick chart analysis might not be the most suitable.
The bottom line
Candlestick pattern analysis could certainly help you take your trading to the next level. However, it takes some time to become comfortable with this kind of chart analysis, which is why it’s not recommended to put your capital at risk while you’re learning. Hopefully, our candlestick cheat sheet has provided a good starting point in your jearney to master candlestick analysis.
If you’re also interested in other styles of technical analysis, make sure to check out our introduction to forex line trading.
